Brazil's Cement Sector Anticipates Sales Increase in 2024 After Consecutive Declines

After experiencing a second consecutive year of sales decline in 2023, Brazil's cement industry is optimistic about a sales growth in 2024.

Brazil's Cement Sector Anticipates Sales Increase in 2024 After Consecutive Declines
Photo by Krys Amon / Unsplash

The Brazilian cement industry, facing a challenging period, is expecting a recovery in 2024 with an estimated sales growth of about 2%. This comes after a 1.7% decline in sales last year, which contributed to an increase in the sector's idle capacity.

The forecast is based on several factors, including the expected steady progress of the revamped "Minha Casa, Minha Vida" housing program, acceleration of works related to major sanitation auctions since 2021, and the resumption of infrastructure projects. These developments were assessed by the National Union of the Cement Industry (Snic).

The estimated 2% sales growth for this year translates to an additional 1.1 million tons over the volume sold in 2023. According to Paulo Camillo Penna, President of Snic, this could mark a halt in the industry's downward trend after two consecutive years of decline. "We envision entering a growth cycle this year, with the reorganization of housing, sanitation, and PAC programs," he said, noting a more positive environment partly due to falling interest rates.

However, the high indebtedness of families, which affects cement consumption for renovations and small constructions, is expected to continue exerting downward pressure on demand. This segment, known as "self-construction," accounts for about 30% to 40% of cement consumption in Brazil.

Penna noted that the sector ended 2023 with an idle capacity of 34.1%, up from 32.9% in 2022. Last year's sales totaled 62 million tons, with December's performance being almost stable compared to the previous year. "We lost more than 3 million tons in sales over the last two years," he said, indicating that the 2023 sales volume returned to levels seen in 2011.

The industry is also focusing on reducing carbon emissions, primarily through co-processing of waste in cement production furnaces. The sector eagerly awaits the regulation of the carbon market, with an investment forecast of 3.5 billion reais by 2030. The Chamber of Deputies approved a bill regulating Brazil's carbon market in late December, which is now awaiting Senate review.

The co-processing activity, responsible for the energy transition by replacing fossil fuel with industrial, commercial, domestic waste, and biomass, has reached 30% participation in the sector's energy matrix, ahead of the 2025 target. Penna mentioned that the global average emissions of the cement industry are 610 kilograms of CO2 per ton of cement produced, while in Brazil, it is 560 kilograms. The sector aims to finalize a plan to neutralize emissions by 2050 in November this year.

Source: Brazil